How can an LTD claim be settled?

Although many disputed Long Term Disability claims lead to lawsuits, most claims settle before trial. There are a number of approaches a disability lawyer can pursue to resolve a long term disability claim without a trial:

1. Reinstatement – this is the simplest way to resolve a long term disability claim. The insurer will pay a lump sum to bring the disability benefit up to date (i.e. payment of arrears), and then restart payments under the disability policy. This type of resolution will often occur when the insured is young and the prognosis for a return to work is uncertain. In this situation, the insurer will not want to pay a large lump sum (as many policies pay disability benefits until age 65) and would prefer to simply reinstate the disability benefit and continue making the monthly payment.

2. Buy Out / Lump Sum Settlement – this option involves a complete settlement of the disability claim, where the insurer pays out a lump sum in return for the insured surrendering all of his or her future rights under the policy. The most contentious issue in disability claims is how to value the future value of the disability benefit (i.e. what is future risk of a claimant remaining disabled to the end of the coverage period). There is a high amount of uncertainty on this issue and thus, the disabled party must discount the total value of the policy to some extent in order to convince the insurer to pay out a lump sum disability settlement. There are a number of other difficulties in valuing a lump sum payout, such as valuing collateral benefits, pensions, CPP benefits (Canadian Pension Plan Benefits), medical benefits, taxation and legal fees.

3. Punitive Damages – even if the long term disability insurer reinstates the disability benefit, the insured can still pursue their case against the insurer for bad faith and seek punitive damages. While the insurer will never voluntarily pay out money for a bad faith denial, the possibility of having punitive damages awarded against them at trial may encourage the insurer to settle the disability claim for a higher amount than they otherwise would have. This is a very useful tool to be used against insurers where the disability benefit was denied in bad faith.

Maximizing the value of a long term disability settlement is a complex task, and one which requires a great deal of skill and knowledge. Jan Fishman is a Vancouver Disability Lawyer with the skill and knowledge you need to maximize your long term disability settlement.

Has your long term disability claim been denied? Contact Jan Fishman and put his experience to work for you.

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